KID (key information document)

The KID was introduced by the EU’s PRIIPs Regulation, which covers packaged retail and insurance-based investment products such as funds, ETFs, structured products and some life insurance policies. It is limited to three sides of A4 and follows a fixed layout: what the product is, a summary risk indicator on a scale from 1 (lower risk) to 7 (higher risk), performance scenarios showing possible outcomes in different market conditions, what happens if the provider cannot pay out, and a breakdown of costs. Since the start of 2023, UCITS funds sold in the EU have used the KID instead of the older two-page KIID.

The point is comparability: products from different providers can be judged under the same headings. The KID is useful but imperfect. Its performance scenarios are model outputs, not forecasts, and have been criticised for looking too optimistic after strong markets. The risk indicator relies largely on past volatility and can change over time. One side effect is that EU brokers generally cannot sell products without a KID to retail clients, which is why most US-domiciled ETFs are unavailable to them. The UK, which kept the rules after Brexit, is replacing KIDs and KIIDs with its own product summary.